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Relaunching Capitalism

This weekend's gathering in Washington of the G-20 industrial and developing economies, billed by some as the second coming of the historic Bretton Woods conference, seems likely to produce more modest ends. Bretton Woods came after years of preparation and five years of world war; it created a global economic order more or less from scratch, establishing the International Monetary Fund (IMF) and the World Bank. The G-20 summit comes after less than a month of planning and won't involve finance ministers, whom analysts say would be needed for any broad new framework to be crafted. The most likely outcome, reports the Financial Times, will be general agreements about coordinating fiscal stimuli--not insignificant, but hardly an overhaul of the global financial order.

All the same, analysts will watch the summit for signs of possible regulation to come, and to gauge the mood of the world's leading policymakers at a time of economic distress. Over the course of 2008, the global economy has seen wild swings in equity and commodity prices, currency upheavals, and severe credit market turmoil, events detailed in a new timeline. In the United States, the private investment bank model, which served as a driving force behind the financial successes of recent decades, eroded completely. Firms like Goldman Sachs and Morgan Stanley, riddled by financial uncertainty, voluntarily subjected themselves to greater oversight in exchange for access to short-term loans from the U.S. government. Washington also greatly expanded its own financial burdens,nationalizing the mortgage guarantors Fannie Mae and Freddie Mac and establishing pools of money to backstop struggling financial institutions.

Other countries and international institutions made similarly sweeping moves. British Prime Minister Gordon Brown, French President Nicolas Sarkozy, and other European leaders agreed to make large sums of...

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